The local stock market will continue to be swayed by news on whether COVID-19 cases are still rising or finally tapering while some investors may be raising cash for upcoming initial public offerings of real estate investment trusts.

“Next week, the local market may take cues from our COVID-19 situation. We’re still seeing an uptrend in COVID-19 cases,” said Philstocks Financial Senior Supervisor for Research Japhet Tantiangco.

He noted that, “If this trend continues, the local bourse may decline since a further worsening of our COVID-19 situation raises the risk of the strictest quarantine measure being implemented in parts of the country again.”

Meanwhile, Tantiangco said a sustained significant slowdown in cases may give rise to positive sentiment since it raises the possibility of our economy reopening further. 

“In light of August lockdowns, the impact of which will likely carry over to September due to still-rising COVID cases, managing expectations over the next quarters will be key in navigating the mostly-cyclical equities market,” said 2TradeAsia.com

It added that, “This may mean a GDP downgrade for the third quarter before resuming a brisker pace in the fourth quarter.”

“With the 'ghost month' drawing close and fund-raising activities (REIT issuances, preferred shares and SRO announcements) vying for market attention, it would be wise to monitor volume flows and brace for intraday volatility,” 2TradeAsia.com advised.

Both COL Financial and Abacus Securities Corporation have BUY ratings for East West Bank despite the 19 percent drop in its second quarter profits. 

“We are maintaining our BUY rating on EW… primarily on attractive valuations,” said COL although it noted that, “we remain cautious over EW’s large exposure in credit cards and auto loans, which represent a total of 50 percent of its loan portfolio.”

Abacus said that, despite the drop in EW’s earnings, “looking under the hood keeps us optimistic, as NPLs remain controlled despite the ECQ, and net income excluding trading gains was up 37 percent.”

COL also favors Max’s Group even though it faces several headwinds in the short-term such as the high unemployment rate and re-imposition of ECQ in August.

“We are encouraged by the improving vaccination rollout in the Philippines. We believe this will be key in allowing the government to ease restrictions once the uptick in COVID-19 cases is controlled. This will also boost consumer confidence, allowing sales and margins to resume their recovery,” it explained.

Abacus also likes First Gen Corporation which expects to grow its attributable capacity by an annual compounded growth rate of 8.3 percent until 2027, with zero exposure to coal.

“We thus remain a Buy on the stock, as its offshore LNG terminal by the third quarter next year should ensure the long-term viability of its gas plants,” it added.